Using a referral from a real estate agent to locate your mortgage company is very common and very dangerous. When it comes to getting the best mortgage provider and the best deal, real estate agent referrals can cost you dearly!

A referral from an agent assumes the agent knows more about the mortgage process than you and therefore his or her recommendation is valid. After reading all of this website, believe me, you know more than any agent on the planet and most loan officers as well.

Are You Related?

In addition, many, if not all, referrals belay the agent having some sort of “relationship” with the loan officers they refer.

Either they have an actual relationship…wife, husband, girlfriend, boyfriend, mom, dad, etc. or they have a “financial” relationship. Neither of these relationships will usually be disclosed to you so you can’t really evaluate the merit of the referral.

Commissions Paid At Closing

Being an insider for 15 years, I can’t tell you how many real estate agents only refer their wife (who mysteriously has a different last name.) or their girlfriend as the “best loan officer I know”. Many of them justify this behavior by saying, “I trust them. I know the loan will close on time”.

My response to that is, “So what?”

As a mortgage consumer I’d have more concerns other that whether the loan will close on time. I want a great rate, the proper loan program, and the confidence the advice is good for me…not just advice designed to get the loan to close on time so the agent can collection his commission on time.

Illegal Kickbacks

Lastly, I can’t count the number of agents who asked me what I’d pay them (kickback) for each referral. This is totally illegal but that doesn’t stop them. Of course, I informed them their request was a violation of federal law and that quickly ended that conversation and our association. Many of these agents were well established and I can only assume the mortgage companies who they work with agreed to the kickback.

So with these three reasons, I say never just take the real estate referral without doing your own due diligence.

Getting educated to locate an ethical mortgage provider on your own is better than simply trusting referrals on any kind.

Good Luck!

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